Eli Lilly \& Co. reports \$22,603 million in revenue for 2012 and includes the following risk factor in Eli Lilly \& Co. (LLY) its MD\&A:

Required

a. How is this disclosure important to our analysis of the company?

b. Explain how we incorporate this information into our forecasts of the company's revenue and gross profit.

c. What additional information do we need for predicting revenue and profit (beyond information disclosed above)?

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We depend on patent-protected products for most of our revenues, cash flows, and earnings, and we will lose effective intellectual property protection for many of them in the next several years. Seven significant patent-protected products, which together composed 68 percent of our worldwide revenue in 2012, recently have lost, or will lose in the next several years, their most significant remaining U.S. patent protection and data-based protection, as well as their intellectual property-based exclusivity in most countries outside the United States: Product Cymbalta Alimta Worldwide Revenues (2012) $4.99 billion Humalog Cialis Zyprexa Evista $2.59 billion $2.40 billion $1.93 billion $1.70 billion $1.01 billion Strattera $621.4 million Percent of Total 2012 Revenues 22 11 11 19843 Loss of Relevant U.S. Exclusivity December 2013 (compound patent plus pediatric exclusivity) 2017 (compound patent plus pediatric exclusivity); 2022 (vitamin dosage regimen patent plus pediatric exclusivity) May 2013 2017 2011 March 2014 2017